construction industry. This firm was a generational family business with a turnover of circa £20MIL. As with many firms, the initial lockdowns were hard, and coupled with the ill health of the financial director, HMRC debts built up. In the initial consultation, the executive Board indicated they were tired and wished to give up. Over the course of the following several weeks, it was discovered that a younger director who didn’t have a full seat on the Board wished to step up. The course of the assignment changed from administration to negotiation with HMRC and the Bank, which had provided a significant Coronavirus Loan. It has been a great feeling to see those directors over the years and see them save the jobs of more than 200 people. How can companies prepare and guard themselves against potential insolvency, especially in an unpredictable business environment? The focus is knowing your business. In the ebb and flow of day-to-day trading, there can be lean months and fuller months. If this is the normal course of trading, then, whilst part of the stress of running a business, it is normal. As such, really knowing your business does help seek that early intervention, thereby giving you options. Many businesses will run with a budgeted cashflow, and my first piece of advice would be to ensure that your business has one if you don’t. That is the starting point. Once your cash flow has been created, you can then run scenarios on the cashflow. For example, what would happen if a major client stopped using your services? Are you too reliant on that one client? Does your business need to diversify? These types of questions can assist in determining whether advice needs to be sought from a restructuring professional. Given the topicality of the Bounce Back Loan scheme, what advice would you provide to a director who has taken a Bounce Back Loan for legal and legitimate purposes and cannot meet the repayment obligations? What options might they have to navigate this situation? Currently, in 8 out of 10 situations, the topic of a Bounce Back Loan does exist. At the risk of repeating, the Bounce Back Loan Scheme was, in my opinion, the right thing for the government to do at the time. However, it is also the right thing for the government to expect these loans to be ingathered for the public purse. The COVID-19 pandemic has changed the way in which the whole world works, and this has led to the markets for some businesses not being there anymore. Front Cover Feature 20 Finance Monthly.
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